Bases for calculation of tax on income from transferring securities in Vietnam

Bases for calculation of tax on income from transferring securities in Vietnam

According to Clause 2, Article 11 of Circular 111/2013/TT-BTC as amended by Article 16 of Circular 92/2015/TT-BTC, the bases for calculation of tax from transferring securities is taxable income and tax rate.

Specifically:

- Taxable Income

The taxable income from the transfer of securities is determined as the transfer price of the securities each time.

+ The transfer price of the securities is determined as follows:

++ For securities of public companies traded on the Stock Exchange, the transfer price of securities is the executed price at the Stock Exchange. The executed price is the securities price determined from the matching result or price formed from negotiated transactions at the Stock Exchange.

++ For securities not subject to the above cases, the transfer price is the price recorded in the transfer contract or the actual transfer price or book value according to the latest financial statement of the unit holding the securities at the time of transfer as prescribed by accounting law before the transfer date.

- Tax Rate: Individuals transferring securities pay tax at a rate of 0.1% on the transfer price of the securities each time.

Bases for calculation of tax on income from transferring securities in Vietnam (Image from the Internet)

Formula for calculation of tax from transferring securities in Vietnam

According to point b, clause 2, Article 11 of Circular 111/2013/TT-BTC as amended by Article 16 of Circular 92/2015/TT-BTC:

Bases for calculating tax for income from capital transfer

...

2. For incomes from transferring securities

...

b) Tax rate and method of tax calculation:

Individuals transferring securities pay tax at a rate of 0.1% on the transfer price of the securities each time.

Method of tax calculation:

Personal income tax payable = Transfer price of the securities each time x Tax rate 0.1%

...

Thus, the formula for calculation of tax from transferring securities is as follows:

PIT payable = Transfer price of the securities each time x Tax rate 0.1%

Tax deduction for incomes from transferring securities?

According to point dd, clause 1, Article 25 of Circular 111/2013/TT-BTC, tax deduction for incomes from transferring securities is as follows:

All cases of securities transfer must withhold tax at a rate of 0.1% on the transfer price before payment to the transferor. Specifically, the tax withholding is performed as follows:

- For securities trading on the Stock Exchange:

+ Securities companies, commercial banks where individuals open securities depository accounts are responsible for withholding personal income tax at a rate of 0.1% on the transfer price before paying the individual. The withholding tax amount is determined according to the guidance at point b.2, clause 2, Article 11 of Circular 111/2013/TT-BTC.

+ Fund management companies, where individuals entrust securities portfolio management, are responsible for withholding personal income tax at a rate of 0.1% on the transfer price of individual securities portfolio according to the distribution table of the company sent to the custodian bank where the company opens a depository account.

- For securities transfer not through the trading system at the Stock Exchange:

+ For securities of public companies registered for centralized securities at the Securities Depository Center:

Securities companies, commercial banks where individuals open securities depository accounts withhold personal income tax at a rate of 0.1% on the transfer price before proceeding with the ownership transfer procedures at the Securities Depository Center.

+ For securities of joint-stock companies that are not yet public companies but the securities issuing organization authorizes the securities company to manage the list of shareholders:

The authorized securities company managing the shareholder list withholds personal income tax at a rate of 0.1% on the transfer price before proceeding with the ownership transfer procedures for securities.

Individuals transferring securities must present the transfer contract to the securities company when doing the ownership transfer procedures.

Tax declaration for persons with incomes from transferring securities in Vietnam

According to clause 5, Article 26 of Circular 111/2013/TT-BTC, tax declaration for individuals with incomes from transferring securities is stipulated as follows:

- Individuals transferring securities of public companies traded at the Stock Exchange do not have to declare directly to the tax authority. Instead, the securities company, commercial bank where the individual opens a depository account, or the fund management company where the individual entrusts portfolio management will declare tax according to the guidance at clause 1, Article 26 of Circular 111/2013/TT-BTC.

- Individuals transferring securities not through the trading system at the Stock Exchange:

+ Individuals transferring securities of registered public companies at the Securities Depository Center do not have to declare directly to the tax authority. Instead, the securities company, commercial bank where individuals open securities depository accounts will withhold and declare tax according to the guidance at clause 1, Article 26 of Circular 111/2013/TT-BTC.

+ Individuals transferring securities of joint-stock companies not yet public companies but where the securities issuing organization authorizes the securities company to manage the shareholder list do not have to declare directly to the tax authority. Instead, the authorized securities company managing the shareholder list will withhold and declare tax according to the guidance at clause 1, Article 26 of Circular 111/2013/TT-BTC.

- Individuals transferring securities not belonging to the cases mentioned in point a, b, clause 5, Article 26 of Circular 111/2013/TT-BTC declare tax according to each occurrence.

- Enterprises performing the procedure of changing the shareholder list in the case of securities transfer without documents proving the individual transferring securities has fulfilled the tax obligation must declare, and pay tax on behalf of the individual transferring securities.

In cases where enterprises declare tax on behalf of the individual, they shall declare the personal income tax declaration dossier on behalf of the individual.

Enterprises filing on behalf must additionally record "Filing on behalf" before the phrase "Taxpayer or Legal Representative of the Taxpayer" and the filer signs, writes their full name, and affixes the enterprise's seal.

In the tax calculation dossier, the tax receipt must still indicate the taxpayer as the individual transferring securities.

- At the end of the year, if the individual transferring securities requests tax finalization, they must directly declare the tax finalization with the tax authority.